Found 38 article(s) for author 'Richard Zeckhauser'

The “CAPS” Prediction System and Stock Market Returns

The “CAPS” Prediction System and Stock Market Returns. Christopher Avery, Richard Zeckhauser, 2015, Paper. “We study approximately 5.0 million stock picks submitted by individual users to the “CAPS” website run by the Motley Fool company ( These picks prove to be surprisingly informative about future stock prices. Shorting stocks with a disproportionate number of negative picks and buying stocks with a disproportionate number of positive picks yields a return of over 12% per annum over the sample period. Negative picks mostly drive these results; they strongly predict future stock price declines. Returns to positive picks are statistically indistinguishable from the market. A Fama–French decomposition suggests that stock-picking rather than style factors largely produced these results.Link

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Signaling with Audits: Mimicry, Wasteful Expenditures, and Non-Compliance in a Model of Tax Enforcement

Signaling with Audits: Mimicry, Wasteful Expenditures, and Non-Compliance in a Model of Tax Enforcement. Maciej Kotowski, Richard Zeckhauser, January 28, 2014, Paper. “The audit policy of a tax authority can signal its audit effectiveness. We model this process and show that in limited circumstances an ineffective authority can masquerade as being effective. We show that high maximal penalties imply underreporting of income.” Link

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Rules and Standards When Compliance Costs Are Private Information

Rules and Standards When Compliance Costs Are Private Information. Maciej Kotowski, Richard Zeckhauser, 2014, Paper, “A regulator, seeking to maximize net benefits, must choose between rules and standards and then set a level of care. The regulated agents have private information about their compliance costs. Rules are set ex ante, so agents know the required level of care. Standards are established after agents have taken initial actions, in anticipation of the regulating bureau’s directive. Those actions allow the bureau to make inferences about agents’ costs and thus set more appropriate requirements.Link

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Social Class and (Un)Ethical Behavior: A Framework, With Evidence From a Large Population Sample.

Social Class and (Un)Ethical Behavior: A Framework, With Evidence From a Large Population Sample. Richard Zeckhauser, September, 2013, Paper. “Differences in ethical behavior between members of the upper and lower classes have been at the center of civic debates in recent years. In this article, we present a framework for understanding how class affects ethical standards and behaviors. We apply the framework using data from a large Dutch population sample. The data include objective measures of class, survey responses relating to ethical behavior…” Link verified June 19, 2014

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Audits as Signals

Audits as Signals. Maciej Kotowski, Richard Zeckhauser, August 16, 2013, Paper. “Those charged with enforcing laws or regulations, or rules of any sort, (collectively “bureaus”) often require regulated entities or individuals (agents) to submit reports on their activities. Bureaus enforce compliance by auditing the reports and imposing punishments when misreporting is identified. For example, a bureau charged with enforcing environmental laws might require polluters to report whether they are in compliance. A bureau charged with enforcing occupational-safety rules might require companies to report accidents. In both cases…” Link

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Behavioural Finance

Behavioural Finance. Richard Zeckhauser, February 20, 2013, Video. “Synopsis: Political and economic events shake the world. Financial markets gyrate widely in response. Such wild rides should induce substantial new thinking. Old theories, which did not allow for the whipsaws of recent years, deserve severe scrutiny, modification, and potential debunking. Such should be the fate of Efficient Market Theory, a beautiful and admired edifice, but one that simply missed salient developments in the real-world financial markets…Link

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Jobs and Kids: Female Employment and Fertility in China

Jobs and Kids: Female Employment and Fertility in China. Richard Zeckhauser, 2013, Paper. “Data on 2,355 married women from the 2006 China Health and Nutrition Survey are used to study how female employment affects fertility in China. China has deep concerns with both population size and female employment, so the relationship between the two should be better understood. Causality flows in both directions; hence, we use a plausible instrumental variable to isolate the effect of employment on fertility. Female employment reduces a married woman’s preferred number of children by 0.35 on average…” Link verified June 19, 2014

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Insider Trading and Stock Splits

Insider Trading and Stock Splits. Richard Zeckhauser, July 30, 2012, Paper. “Stock splits have long presented a puzzle in finance. Unresolved questions are why do firms undertake them, and why do they offer abnormal returns both before and after the announcement date? Conventional explanations focus on making stocks more liquid and signaling firm prospects. However, abnormal returns, particularly before the announcement date, should raise strong suspicions of insider trading. We examined 718 split events in the emerging stock market of Vietnam and found evidence indicating illegal insider trading in stock splits by firms more vulnerable…” Link

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Assessing Uncertainty in Intelligence

Assessing Uncertainty in Intelligence. Jeffrey Friedman, Richard Zeckhauser, June 2012, Paper. “This article addresses the challenge of managing uncertainty when producing estimative intelligence. Much of the theory and practice of estimative intelligence aims to eliminate or reduce uncertainty, but this is often impossible or infeasible. This article instead argues that the goal of estimative intelligence should be to assess uncertainty. By drawing on a body of nearly 400 declassified National Intelligence Estimates as well as prominent texts on analytic tradecraft, this article argues that current tradecraft methods attempt to eliminate…” Link

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The Returns to Education in China: Evidence from the 1986 Compulsory Education Law

The Returns to Education in China: Evidence from the 1986 Compulsory Education Law. Richard Zeckhauser, June 2012, Paper. “As China transforms from a socialist planned economy to a market-oriented economy, its returns to education are expected to rise to meet those found in middle-income established market economies. This study employs a plausible instrument for education: the China Compulsory Education Law of 1986. We use differences among provinces in the dates of effective implementation of the compulsory education law to show that the law raised overall educational…” (May require user account or purchase) Link

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